Fears of hindering expansion plunge artificial intelligence and data center stocks after the Democratic victory

Shares of artificial intelligence and data center companies fell in pre-market trading on Thursday, after the Democrats' wide victory in the US midterm elections raised concerns about the possibility of obstacles to rapid expansion in this sector.

Shares of specialized cloud computing companies, which have become an indicator of investor concern about huge spending on artificial intelligence, declined, as shares of CoreWave and Nebios fell by 1.6 and 2.2 percent, respectively, according to Reuters.

Investors fear that Democratic control of Congress will lead to the imposition of tighter oversight of the data center sector, which may slow down the pace of its development, at a time when popular opposition to the establishment of new facilities is already increasing.

UBS analysts estimated that about 30 percent of the expected increase in the capacity of data centers in the United States during the year 2028 may be affected by the potential cessation of construction work, in reference to the risks facing a sector whose growth depends on the rapid expansion of the construction of new facilities.

Political uncertainty is adding pressure to the broader wave of investment in artificial intelligence, with investors increasingly questioning the ability of the massive capital spending needed to build AI infrastructure to generate sufficient returns.

Shares of data center operating companies “Applied Digital” and “Cypher Digital” fell by about 1 percent each, while “Irene” shares fell by 1.5 percent.

The losses extended to utility companies and equipment suppliers that benefited from the expansion in this sector, as “GE Vernova” shares declined by 1.2 percent, and “Constellation Energy” shares declined by 0.7 percent.

The performance of the giant cloud computing companies was mixed, as “Amazon” stock rose by about 1 percent, while “Microsoft” stock stabilized. Shares of chipmakers Nvidia, Intel, and Broadcom also declined by rates ranging between 0.4 and 1.5 percent.

In a separate context, Qualcomm shares fell by 10.2 percent, after quarterly smart phone chip sales fell below Wall Street estimates.